Insurers Allege $3M Fraud In Minn.

By Mark E. Ruquet

NU Online News Service, Aug. 21, 4:10 p.m.EST?Five insurance companies have teamed up to sue fivechiropractic clinics and their owners and doctors, alleging $3million in damages in a Twin City fraud suit.

Progessive Corporation of Mayfield Village, Ohio; Allstate Corp.of Northbrook, Ill., and it's subsidiary Encompass Insurance;Mutual Service Insurance Companies of St. Paul, Minn.; and WesternNational Mutual Insurance Group, headquartered in Edina, Minn.,joined forces in filing a civil lawsuit. The suit alleges that agroup of St. Paul and Minneapolis area clinic owners andchiropractors arranged for accident victims to visit theirestablishments to defraud the insurers.

The suit, filed in Hennepin County District Court, alleges thatover a two-year period, insurance investigators found that theclinics obtained motor vehicle accident reports and solicitedvictims in phone calls to come to the clinic for treatment.Accomplices allegedly were paid for each victim they transported toand from the clinic for treatments.

The five insurers allege the clinics billed for treatments neverprovided or that were provided by a non-licensed person and billedas chiropractic services.

The five companies are seeking $3 million in damages from SaintPaul Spinal Health Center Inc.; Midwest Family Chiropractic Group,P.A.; South Metro Spinal Rehabilitation Inc.; Eastside Chiropracticand Rehabilitation Inc.; and Northeast Spinal RehabilitationInc.

The suit also named the clinic owners Howard Pindyck andchiropractor Phillip Bruno, and chiropractors Michael Czichray,Leonard Evangelist, Mark Soli and Russell Anderson as being part ofthe scheme.

Courtney Neville, a spokeswoman for Progressive, said abreakdown of individual damages alleged by each insurer was notavailable. She said the investigation was lead by Progressive.

Pat McCann Progressive's Minnesota special investigative unitmanager said Progressive and MSI first learned of the fraud andalerted the other insurers after it was discovered. Thecollaborative effort resulted in the suit, which he said is thefirst large collaborative effort brought in the state.

"We compete for the consumer's business, but it's a big helpcollaborating in these fraud cases," said Mr. McCann adding theinsurers regularly share information in this combat and arepermitted by the state to do so.

A separate, federal criminal investigation is ongoing, he said,but he could give no further details.

No state criminal charges are pending in the case, saidMinnesota Commerce Department spokesman Bruce Gordon, because thedepartment still does not have an investigative arm to root outfraud, despite passage of legislation that allows for the settingup of such a unit in April. He said the department is still waitingfor the state legislature to provide funding for an investigativeunit so it can pursue these cases.

Jim Bernstein, Minnesota Commerce Commissioner, said in astatement that when the legislature does finally provide the fundsfor the unit, it "will have a real impact on cracking down on thisillegal activity."

Mr. Gordon disputed the insurers' statement that the state'scurrent no-fault law requiring insurers to either deny or payclaims within 30 days is contributing to fraud. He said insurerscan hold up payment when the company has evidence of fraud.